The main focus of this report is the question, ‘To what extent are welfare transfers and services in Australia directed towards the ‘middle class’’? However, this question makes most sense when understood in the context of the wider debate about whether such middle class welfare is desirable. Consequently, the report commences with a discussion of the role of the state in providing or funding `welfare services' in mixed economy societies like Australia. ‘Welfare’ is defined here to include government support in cash or kind provided to individuals and households. This includes education, health, social security and welfare, housing and community services, as well as the tax expenditures in these areas. The report focuses upon the most important components of these: education, health, and social security, together with superannuation tax expenditures.